Tax Law Changes generate Imputed Income
On December 22, 2017, Tax Cuts and Jobs Act (P.L. 115-97) was signed into law, resulting in changes to university policies on paying for relocation expenses and giving gifts to employees.
Relocation expenses must be reported as Federal Taxable Income
- Effective January 1, 2018, all employer-provided relocation expenses, including moving expenses paid directly to a third party (e.g. a moving company), must be reported as federal taxable income, subject to income tax and FICA withholding.
- The State of California has not issued guidance conforming to new federal laws. As a result, California wage income will only be adjusted in accordance with prior tax law.
- Policy G-13, Policy and Regulations Governing Moving and Relocation provides additional information
| Expense Type | Taxable |
|---|---|
| Moving household goods | Federal |
| Travel to new residence | Federal |
| Meals while traveling to new residence | Federal/State |
| Temporary lodging / meals | Federal/State |
| Storage | Federal/State |
Some gifts to employees must be reported as Taxable Income
- Report gift cards, parking permits for one month or more, and transit passes given as gifts to recognize length of service as taxable income. Effective January 1, 2018, gift cards, one-month parking permits, and transit passes given to employees in recognition of length of service or safety achievement must be treated as wage income subject to income tax and FICA withholding. In these instances, these gifts are now considered cash equivalents. Tax reporting is required on these types of gifts in any amount, superseding previous policy thresholds.
- How to report taxable gifts to Tax Reporting & Compliance. Instructions on reporting gifts as taxable income and guidelines for gift giving are available at Tax Reporting & Compliance Forms.
- Gift cards with minimal value excluded from income tax reporting. At this time, in accordance with UC Office of the President guidance, recognition awards provided by gift cards with minimal value ($75 or less) may be excluded, following existing guidelines of no more than three per fiscal year.
- These gift cards must comply with all policy limitations and requirements and may be excluded from income tax reporting if the employee does not receive more than three within the calendar year.
Please direct questions to the Tax Reporting & Compliance Team at [email protected].